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Should you sell your invoices for cash?

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With the economy still in disarray many businesses are suffering from cash flow shortages. Customers do not have the money they need to pay their bills and this leaves businesses stuck as they don’t have money to purchase the goods they need. It also means the business could be late on paying their bills as well. Getting people to pay especially when things are tight can be a big frustration to your company. Customers that won’t pay for 60 days and vendors that want their money now can lead to a lot of problems with your cash flow and you may find that you are suffering from some very serious cash flow shortages.

What can you do about cash flow shortages? You likely don’t want to get a loan because it won’t really solve the problem. That only provides a temporary solution. One great option you should consider is called factoring. Factoring is when you take your invoices and you sell them for cash. This way you have the money you need right away and you won’t need to worry about collecting it from the customer.

A third party or Factoring Firm will purchase the invoices from you at a discounted rate say 80% of the value that you are selling them for and then they will pay you up front for this amount. They will then worry about the collection process and getting their money back from the customer. However in order to implement factoring at your company your customers need to have good credit and your business needs to generate a certain amount of revenue.

Where can you find a company that offers factoring? There are many out there for you to choose from. Simple Google “Invoice Factoring” and you will see a large number of companies that come up. Contact several companies to find out what their costs are as well as how quickly they can get started. Selling your invoices is a great way for you to be able to improve your cash flow and also to increase your company’s performance numbers. You are really able to use them as collateral as the lender is basically paying you for the invoices and relaying on them to pay back the loan.

For companies invoice factoring is incredibly valuable because you do have the money now and you also don’t need to deal with the annoying collection process for the money. This can be a big headache to a lot of companies and it can actually cause you to lose even more money as you cannot get your customers to pay.

GE is one company that offers factoring services. What they do is assess your company along with the credit rating of the customers to see what type of percentage they will purchase the invoices for. Then you will have the money from the accounts deposited in about 24-48 hours. GE Money does provide valuable factoring services to a lot of companies and you can start the application process through their website. This is definitely a company you want to talk to when it comes to factoring as it helps you to really see all of your options and how you can improve your cash flow.

Not only do your customers have to pass the good credit exam, you also need to pass it as well. It is also important that you have at least 3 years of profit to show the factoring company. This will allow them to make a better decision as they can see you do generate plenty of profits to actually afford the factoring services and they aren’t taking on a big risk by paying for your invoices.

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